WASHINGTON -- When Republican presidential nominee Mitt Romney complained that 47% of Americans don't pay income taxes, he tapped into an increasingly common GOP criticism of the nation's current tax code.
Congressional Republicans have long complained that nearly half the country does not pay income taxes -- a group they are targeting as lawmakers consider an overhaul of the tax code next year.
GOP leaders have repeatedly said that all Americans should pay their fair share – “have some skin in the game,” as Rep. Eric Cantor of Virginia, the House majority leader, has said, even if it’s just $1.
“More Than Half of U.S. Households Did Not Pay Any Income Tax in 2009,” read the news release headline from Sen. Orrin Hatch, the top Republican on the Finance Committee, as he testified at a tax hearing earlier this Congress.
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These Americans, though, may not be the freeloaders Romney characterized in his private talk with donors, which was captured on video and made public.
An analysis from the nonpartisan Tax Policy Center found that of the 78 million American households that pay no federal income tax, most do pay other taxes: payroll taxes for Social Security and Medicare, or the sales and excise taxes almost all Americans pay each time they fill up the tank or shop for a quart of milk in areas with taxes on purchases.
Of those who escape federal income tax, the overwhelmingly majority, more than 70% earn less than $30,000 a year.
Those who pay no federal income tax are actually 46% of American households, according to the center, and are made up of two groups:
Half are those who do not earn enough to pay the tax under the code, which offers standardized deductions to make the system progressive as it seeks to preserve a “subsistence” level of income. These are largely seniors and lower-income Americans.
The other half are those who benefit from specific tax breaks -- the largest benefits going to the elderly, children and the working poor.
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The Tax Policy Center notes that almost all of these tax policies and loopholes come from Congress. Lawmakers often prefer to provide benefits through the tax code rather than on direct spending programs, which can become more politically difficult.
“The high percentage of people paying no federal income tax is not the result of the levy’s tax function,” the center wrote. “It is caused almost entirely by Congress’ insistence on using the tax system to deliver social benefits.”
As President Obama seeks to raise taxes on top-income earners to boost revenues, Republicans prefer a strategy that would lower tax rates for all Americans, including the wealthy, while also “broadening the base,” as it’s called -- spreading the tax burden more widely across all taxpayers.